Going Beyond H-1B Visas to Import Top Overseas Talent

U.S. employers exhausted the supply of 65,000 H-1B visas available for 2007 on May 26, 2006, a full 17 months before new visas would be issued. Although experts are cautiously optimistic that Congress will raise the cap in 2007, recruiters still face a full year of inadequate supplies of engineering and IT candidates.

Recruiters should explore all possibilities before they conclude that tapping foreign labor markets for U.S. positions is simply not feasible. Alternative visas may offer some limited relief from the recruiting nightmare created by the closing of the H-1B door.

Free trade visas, training visas and intra-company transfer visas apply only to narrow categories of workers, but may provide recruiters with options for global recruiting until Congress creates a more permanent solution.

"These visas are the product of free trade agreements between the United States and these countries, and we have not reached the quota on them," says Susan Cohen, manager of the immigration section at law firm Mintz Levin Cohn Ferris Glovsky and Popeo in Boston.

Unlike traditional H-1B visas, which are valid for three years initially, with extensions up to six years, these free trade visas are good for only one year at a time.

"Despite these limitations, the free trade H-1B visas are a welcome option when no other H-1B visas are available," Cohen notes. "Indeed, some employers have decided to focus their recruiting efforts on these countries since visas are available for these nationals if they meet the ‘professional worker’ criteria."

Another relatively new work visa created as a result of a trade agreement is the E-3 visa for Australian nationals. The criteria for this visa are similar to those for the H-1B. As with all types of H-1B visas, the employer must make certain attestations to the Labor Department about the wages and working conditions for the position.

"But the application process is streamlined so the visa can be obtained quickly," Cohen reports.

"Not only are Australians who come to work on E-3 visas admitted for two years, they can continually extend their visa status as long as they still qualify for the visa," Cohen says. "Also, the E-3 spouse is allowed to work in the United States, which is not the case for H-1B spouses who arrive with H-4 dependent visas."

With the E-3 visas now available, Australia may prove to be a fertile recruiting site for scientific and engineering talent in short supply in the U.S.

Another alternative to the H-1B visa is the TN visa created for Mexican and Canadian professional workers under the North American Free Trade Agreement.

"These visas are only for certain occupations listed in NAFTA, but if the potential employee is Canadian or Mexican and the job is on the NAFTA list, it is a straightforward matter to obtain this visa, which is valid for one year at a time," Cohen explains.

About 65,000 TN visa holders currently work in the U.S.

Training, foreign firm and transfer visas Visas are available for employees brought into the U.S. for training purposes, but employers face strict limitations.

"Employers may be able to fit candidates into H-2, H-3 or other visa categories, but they are very narrow," says Elena Park, head of the immigration practice at Cozen O’Connor in Philadelphia.

There is no cap on H-3 visas, but they carry a two-year time limit.

"The H-3 is not for work purposes; the employee must participate in an established training program," Park notes. "But some employers have been able to create training programs under specific circumstances. In the initial petition stage for H-3 visas, immigration will look at the training program."

About 3,000 foreign nationals currently train in the U.S. under H-3 visas.

The J-1 visa is similar to the H-3, but the definition of training is somewhat broader.

"It can be used for an employee to shadow a senior worker, for example," Parks says. "But the J-1 contemplates that the person is coming in with a lack of knowledge."

J-1 visas are issued for one year and can be extended, but the conditions for an extension are fairly strict, and the visas must be processed though approved sponsor agencies. About 350,000 foreign nationals hold J-1 visas in the U.S.

"J-1 sponsors are regulated by the State Department, and these sponsors will not issue the paperwork if the employer is not above board," Cohen warns. "Proposed changes for J-1 regulations in 2007 will subject employers to more scrutiny."

For entry-level employees, employers can try to use J-1 visas, but if the candidate has several years of experience, it’s difficult to prove the case that training is necessary, notes Ted Ruthizer, business immigration chair at Kramer Levin Naftalis & Frankel in New York City. Ruthizer suggests that recruiters may be able to hire abroad if candidates qualify for an O-1 visa, designed for employees with extraordinary ability in their field.

"But for business purposes, the toughest standard of ‘pre-eminence’ in the field is applied," he cautions. "O-1s require a track record of awards, published articles, media reports or other indications of recognition."

For example, a new MBA graduate, no matter how talented, is unlikely to obtain an O-1. Currently, about 30,000 O-1 workers are in the U.S., with only a few thousand new O-1 visas issued each year.

Where a U.S. business is majority-owned by a foreign company that has made a substantial investment in the U.S. business or engages in trade with the home country overseas, recruiters for the U.S. business can use an E visa option to hire workers of the same nationality as the business’ majority ownership. The person applying for the visa must have essential skills necessary for the U.S. business or must be coming to fill a managerial type role within the company.

"Once the employee has obtained the visa, he or she may enter the United States for two years at a time and may extend the visa indefinitely," Cohen says. "Again, a big selling point is that the spouse can work in the United States."

L-1 visas are issued for intra-company transfers for up to five years for workers with specialized knowledge or seven years for managers or executives. The employee must have worked in the affiliated company for at least one year out of the past three. About 315,000 foreign workers in the U.S. hold L-1 visas.

"Companies are hiring abroad for the purpose of establishing the one year of employment and the specialized knowledge required, but the employer must be careful that the knowledge is specialized, meaning that it is specific to the company," Park cautions. "It doesn’t have to be proprietary knowledge or a trade secret, but it must be specific to the company."

The specialized-knowledge requirement under the L-1 is different from that of H-1B, which basically requires only that the employee has a bachelor’s degree.

"The employer cannot use L-1s to bring in generic engineers or programmers," Park warns.

But a marketing manager or an IT professional with knowledge of the company’s clients and operations may meet the L-1 criteria.

"Creative" approach "Sometimes a candidate does not fit any visa category, and the employer is simply unable to hire," Park says. "If you become overly creative with your use of alternative visas, you risk violating immigration laws." Although enforcement of the regulations for non-H-1B visas is relatively lax, L-1 visas may be scrutinized and improper use of any visa opens an employer to legal risks.

While recruiters may be able to piece together a sufficient talent pool using some combination of the non-H-1B visas, the best solution clearly lies in higher H-1B caps. Ruthizer is advising all of his clients to lobby for raising the H-1B cap in 2007.

Park is hopeful that the H-1B cap will be raised.

"The biggest obstacle is that all immigration issues, including the problem of illegal immigrants and porous borders, are lumped together, instead of segmenting the issues and addressing them separately," she says.

Legislation on the table would increase the H-1B cap from 65,000 per year to 115,000.

"Also, it would provide a complete exemption from the cap for those individuals who have achieved a master’s degree or higher from a U.S. school in the fields of science, mathematics and/or technology," notes Dave Ceccanecchio, an associate in the immigration services team at Wolf, Block, Schorr and Solis-Cohen in Philadelphia.

The emergency exemption of 20,000 visas for foreign students who received an advanced degree from a U.S. university was exhausted before the fiscal year began. In 2005, U.S. companies needed but could not find an additional 50,000 master’s and Ph.D. graduates, according to a Duke University/Booz Allen Hamilton study.

Raising the H-1B cap and exempting advanced-degree graduates will reduce the pressure on recruiters in the final quarter of 2007, but a more permanent solution for both temporary and permanent immigration will be necessary to resolve ongoing recruiting difficulties for critical positions in the U.S.